Thursday, November 10, 2011

IS THE TANZANIAN GOVT BROKE?

There are growing signs that State coffers are running dry, a situation which has put the government in an awkward position when it comes to meeting its obligations and honouring a wide range of commitments.

Indicators showing that the government has liquidity problems include the recent failure to pay civil servants their October salaries in full, disburse subsidies to political parties and finance budgeted projects.

Reliable sources have confided to The Citizen that last month, a number of government workers in some district councils failed to get their pay in time, while some received partial payment.

But the minister for Finance and Economic Affairs, Mr Mustafa Mkulo, quickly dismissed the concern and maintained that the government was in a sound financial position and capable of meeting its financial obligations without any unnecessary delays.

He told The Citizen in Dodoma where he is attending the ongoing Parliamentary session that it was not true that there was salary delay of salaries as his office through Treasury has been approving salaries on 25th of every month.

“If there have been any delays, it must have been the result of some technical issues and not government failure to release money,” he said.

However, The Citizen has established that the government failed to release full salary allocations to some district councils.

A public notice with reference number GDC/F.10/1/VOL.III/166 dated October 26, 2011 signed by one Swai V. W on behalf of Geita district executive director, bears testimony to the government failure to fully remit salaries.

A source that asked not to be named at the Finance ministry, said Geita was one of many councils whose workers either received their pay late or amounts lesser than what is due to them.

The source also told this paper that until the end of last month, the government had also failed to release funds for other charges (OC) for the second quarter of this financial year. According to the Finance Act OCs for the second quarters are supposed to be released on October 1.

But when reached for his comments, Tanzania Revenues Authority (TRA) tax services education officer Protas Mmanda said the authority has been collecting ‘enough funds’ in accordance with its targets.

Another indication that the government finds it hard to meet its cash obligation was revelation earlier this month that it has failed to honour contractors’ debts to the tune of Sh425 billion.

The ongoing exhibitions and celebrations by ministries have also raised concern to some people, who are noting that a lot of money is going into these functions unnecessarily.

Some MPs who talked to The Citizen on condition of anonymity wondered where the ministries were getting the money since it was not budgeted for.

Furthermore, Mr Mkulo’s statement last month that his ministry was thinking of stopping funding the purchase of oil for emergence power generation, has been cited by some commentators as yet another sign that the government was in a financial fix.

Commenting on the issue, Mzumbe University economist Dr Prosper Ngowi said if it were true that the government has failed to pay its workers, the move would have bad impact to the country’s economy.

“After the budget is passed the task is left for the government to look for funds… any suggestion that the government lacks money to pay its workers will lead to negative impacts to our economy locally and internationally,” he said.

Mr Julius Mushi, a graduate from University of Dar es Salaam business school argued that if the government is failing to raise money to pay its workers and run its day-to-day activities, one can argue that it is broke. Reached for comment from Apollo Hospital in India where he is undergoing treatment, the shadow minister for Finance and Economic Affairs, Mr Kabwe Zitto, said the situation doesn’t surprise him.

“For a very long time now, I have spoken about the financing stress the government is going through,” he said.

Giving some data, Mr Kabwe claimed that total government expenditure in September was Sh910 billion against revenue collections of Sh480 billion only, which translates to a deficit of Sh430 billion.

However, he noted, salary payment could not be a big problem as such, since the payroll costs amount to around Sh264 billion a month, which would be handled by domestic revenue sources. He argued that the government might be in an awkward position because of low tax collections and reluctance by donors to release funds.

“Mkulo needs to move a motion in Bunge to amend the Finance Bill of 2011 in order to widen tax collection, especially by ensuring all mining companies pay corporate tax,” said Mr Kabwe